January 12, 2018 • 46 mins
How did YouTube get its start? We trace the history from its days as an independent company to the historic Google acquisition.
Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Technology with tech Stuff from works dot com. Hey there,
and welcome to text Stuff. I am your host, Jonathan Strickland,
executive producer, here at how Stuff Works, and today I
thought we'd take a look at one of the most
influential sites on the Internet. In fact, it's the second
(00:26):
largest search engine on the Web. And if you haven't
looked at the title of this episode, you might be
thinking I'm talking about Yahoo or something, but nope, I'm
talking about YouTube. It's a site that has recently been
in the spotlight for lots of not so great reasons,
but we'll get into those a bit later. And I
should mention this is part one of a multipart episode,
(00:48):
and as of the recording, I'm not exactly sure how
many episodes this is going to end up being in total,
but I suspect it will be too. I'll let you
know more in our next episode after I've those notes done.
But today, YouTube is the dominant player in online video content.
Users watch, share, and upload hours of videos every moment,
(01:12):
So we're gonna take a look at how YouTube got
it start, how it rose to prominence, and some of
the stories and scandals that have shaped it along the way.
So let's start at the very beginning, which I am
told through song is a very good place to start,
and that would be at PayPal. Now. PayPal, to back
(01:33):
up even further, was founded partially by two other companies.
Peter Thiel, Ken Howary Luke Nozack and Max Levchin created
a service called Confinity. Like today's PayPal, this was a
money transferring platform, and in two thousand, Confinity merged with
(01:55):
an online banking site called x dot com, which was
co created by Elon Musk. So already we've got some
really big names involved in this story, namely Peter Thiel
and Elon Musk. Really, the news service became known as
PayPal shortly thereafter, and by two thousand two had attracted
attention from a little company called eBay. eBay moved to
(02:16):
a choir PayPal for the princely sum of one and
a half billion with a B dollars. Now, this acquisition
made a lot of people really rich. Or let's get
real here for a second. People, it made some people
rich and other people it made way more rich than
(02:39):
they already were. Because I hate to tell you this,
but the fairy tale of the developer who comes from
nothing and then becomes a millionaire isn't nearly as common
as we would all like to think. Often it's more
like rich person goes and does things and gets more rich.
But that's a topic for another show on another podcast.
(03:01):
Really now, two former employees of PayPal, Chad Hurley and
Steve Chen, were shooting the breeze at Chen's then new
San Francisco home, and I like to imagine they were
having money fights with each other, throwing balls of cash around.
That's probably not accurate. They did shoot some video while
(03:22):
they were hanging out, and then they lamented that sharing
video online was unreasonably hard. The Internet and the Web
had started to transform everything, but it was still difficult
to get video to anyone. This is the era before
the smartphone, so for one thing, we didn't all have
video cameras in our pockets. And it was the era
(03:45):
before anyone had created a really dependable platform upon which
you could upload and share video that could get a
lot of traction. Meanwhile, there was a third former PayPal
employee named Jawed Catam who was lamenting that there was
no easy way to find videos of specific events online.
(04:07):
He was thinking about some events that had really made
the news and you should be able to find video
of those events online, But unlike other sources on the
other types of media, there was no really good way
of searching for video. So you could find news reports
or sometimes images, but you couldn't necessarily find video clips. Now,
(04:28):
there were two events in particular that he cites as
being sort of the inspiration for thinking about this, and
one of them is is a catastrophe, and the other
one not as much, although it was treated as a
catastrophe at the time. So the two events he cited
in an interview in two thousand six were the moment
(04:49):
during the halftime show of the two thousand four Super Bowl.
That moment the moment in which Janet Jackson's breast was
exposed during what was later called a wardrobe malfunction. So
that was the first event he cited as one of
the reasons he wanted to create a platform that would
be easier to share video because he couldn't find video
(05:10):
of that event. And the other was a tsunami that
had devastated places like Indonesia, Sri Lanka, Thailand, and India,
and he knew that there were a lot of people
who had captured video footage of the tsunami and that
video footage could be really valuable for people and educational
(05:30):
for people, but there was no easy way to search
for it. You couldn't find it anywhere. And he knew
that there were other events like this, but again there
was no way to find them. So he would end
up having a meeting with Chen and Hurley, the two
guys I mentioned earlier, and talk about this problem, and
they were all kind of going over this same issue. Now.
There was no platform at that time where you could
(05:52):
easily upload a video and other people could go there
to watch it that really gained traction. There were a
lot of little sites, but no one had really come
to the forefront. When it came to video online, your
options were pretty much limited. You might host a file
on a server and people could visit a website and
download the file to their own machine. That's not terribly
(06:15):
user friendly and it took a long time and still
let's somehow. That's how some of the earliest web series
like Red Versus Blue from Rooster Teeth distributed their content
in the early days, is that you would actually pop
onto their site, download a file when it became available,
and then on your computer at home you would launched
the video in a video player program that was compatible
(06:36):
with whatever file format the content creator was using. It's
not the smoothest experience. You can also create a web
based video player using one of several different proprietary formats,
which just made things more confusing. Microsoft had Active Movie,
which was a media player that launched in Nix and
(06:57):
allowed streaming media. Real Player had launched their application the
following year in and Apple would follow suit in n
with quick Time four and their streaming media format, So
there were a few solutions out there if you wanted
to host streaming video on a site, but it was
still not the greatest experience in the world from a
(07:17):
user perspective because most people were relying upon dial up modems,
so it was really slow to access anything. They had
to download whatever the applicable movie playing program was and
have that stored on their machine, and streaming video was
just hard to do without all those annoying buffering issues.
So still not very great now. Those solutions also, again
(07:42):
we're not entirely based on the web. You had to
have that program, so first you have to go and
download your Active movie player, and then you would have
to access the website that actually has the streaming content
on it, and if you went to a different site
that had say quick Time for streaming content on it,
you would have to get a totally different later because
they were incompatible formats. This proprietary approach was fragmenting the
(08:05):
experience and that's never really satisfying from a user perspective.
In two thousand two, Adobes Flash product came along, and
that simplified things because people began to adopt that as
this standard for streaming technology at the time. And a
couple of years later, more people had access to broadband speeds,
making streaming video a viable option that didn't always include
(08:27):
ages of buffering time. So you had sort of this
convergence of different events that were making it easier to
have a streaming video service. You had Flash coming about,
which gave a lot more versatility to streaming video, and
you had the fact that more than half of American
(08:49):
households had access to what was then considered broadband speeds,
which was much lower than what we consider broadband today.
So in early two thousand five things were kind of
falling into place. It was the right time to look
into creating a platform in which users could upload video
footage and watch other video clips. It would become parts
(09:12):
social platform, parts search engine, and the three felt they
were onto something and began to have some serious discussions
about what it would take to launch such a platform.
So who are these guys? Well, Steve Chen was born
in nineteen seventy eight in Taipei, Taiwan. His family moved
to Chicago, Illinois, when Chen was fifteen years old. He
(09:33):
attended the University of Illinois Champagne, Urbana. This was a
school that had some pretty notable alumni, particularly in the
field of computer science. For example Mark Andreson, who would
go on to co create the first commercially successful web browser, Mosaic.
He went there. Chen was interested in coding and graduated
(09:53):
from the university and moved on to work for PayPal,
and he would end up meeting Chad Hurley on his
first day on the job. Hurley was born in nineteen
seventy seven in Birdsboro, Pennsylvania. He studied fine art at
the University of Pennsylvania, and he leveraged his artistic abilities
to help design user interfaces and join PayPal to work
(10:15):
on its UI. And that's really important. We often will
not really consider how challenging it is to create a
user interface that is clear. It gives the user very
uh simple instructions on how to use the service, and
(10:36):
there's not a lot of clutter there. It's actually a
lot more challenging to do than you would think. And
so Hurley came from this from a fine arts perspective,
which is pretty interesting to me. Jawad Karnem was born
in nineteen seventy nine and East Germany and his family
moved to West Germany in nineteen eighty, which was a
thing back then because there used to be an East
(10:57):
and West Germany. I remember those His parents were scientists
and researchers. They moved to the United States in nineteen
Kareem would attend the University of Illinois along with Chen,
although he didn't actually meet Chen while attending the school,
and he dropped out before graduating in order to go
work at PayPal. Now, according to the sources I research,
(11:19):
Kareem didn't meet up with Chen until they were both
at that company, until they were both at PayPal, though
they again did attend the same university. Kareem would later
leave YouTube and finish his studies first, though he would
graduate in two thousand and four with his undergraduate degree.
He would leave YouTube later on and pursue post graduate degrees,
and early on he was frequently left out of stories
(11:41):
about YouTube's rise to success, though that was later rectified.
And I'll talk a little bit about why he was
kind of written out of the history and just a
little bit. Oh and uh. Like I said, YouTube wasn't
their first go at a video platform service. There was
an earlier failed concept that I think I should address.
The original video platform concept before they settled on YouTube
(12:05):
was one that Chen Hurley and Kaream called tune In
hook Up and yes, it was meant to be a
dating website. Users were supposed to post videos of themselves
and Peru's other videos, all in the name of finding
a certain special someone with whom you could then hook up.
According to Kareem in an interview in two thousand sixteen,
(12:27):
the founders even trolled through Craigslist personal ads and offered
women twenty dollars to upload videos of themselves to this
service in order to populate it, but they found zero takers. Anyway,
that particular startup fizzled, but the three founders saw possibilities
in using the video platform technology a different way, And
(12:48):
on February two thousand five Valentine's Day, which Kareem would
later say was to a coder, just a normal day,
which I think is just a sly remark on the
personal lives of your typical coders, the team pivoted away
from this concept of tune in hook up and they
pivoted toward YouTube. Hurley registered the trademark for the logo
(13:13):
and the domain of the site on that day. Their
new platform would be one where people could upload videos
about whatever subjects they like within reason, and I wouldn't
have a narrow focus on dating like their original concept,
but rather serve as a general video publication and consumption site.
But would it work well? They weren't sure. Chinn and
(13:33):
Kareem were focused on creating the technical platform for the service,
while Hurley concentrated on the user interface and the logo
design for the site. The team built out the infrastructure
for the service, and the first video to officially hit
YouTube would not go up until April two thousand five. Now,
I'm sure a lot of you already know the name
(13:53):
of that video because it is a piece of Internet history,
But just in case you don't and you some pub
trivia knowledge in your back pocket. The title of the
very first video upload to YouTube was Me at the
Zoo and it's a video of Jawad Kareem standing in
front of an elephant enclosure at the San Diego Zoo
(14:14):
and it published on April two thousand five. As of
the recording of this podcast, it has accumulated more than
forty four million, five hundred thousand views. It lasts eighteen
seconds long and contains the important information that elephants are
really cool because they have really long trunks. And while
(14:35):
I'm poking some fun at the content of the video,
the important thing was it was a piece of content
that could be tested out on the platform itself. What
was in the video wasn't nearly as important as the
fact that this was the first video to go live
on an official YouTube server it would ultimately face the public.
This wasn't just some random test video on a server
(14:56):
that was never going to be forward facing and only
be used by developers. This was the first actual YouTube video,
and that is why it is significant. Now. I have
a lot more to say about YouTube in those early days,
but before I get into that, let's take a quick
break to thank our sponsor. All right, it's two thousand
(15:21):
five April. YouTube still was not yet open for the public. Essentially,
in late April early May two five, the company launched
its beta home page. They had secured a deal with
an internet service provider called Server Server Beach, and the
deal was for an unlimited data plan for a hundred
(15:41):
and twenty nine dollars a month. The earliest incarnation of
YouTube wasn't exactly a home run. Kareem said that their
original version of the site didn't let users select which
videos to watch. Imagine that going to YouTube, but you
have no control over what video is going to play. Instead,
(16:02):
it was a Russian roulette style of experience. You'd go
to the site and it would randomly serve up one
of the videos stored on its servers. And because there
were relatively few videos available and meant you were likely
to see a lot of the same stuff, it wasn't
the sort of experience that would lead people to coming
back for more. And in fact, Karim himself had gone
to airports and filmed planes landing and taking off just
(16:26):
to have more content to throw into the servers, because
otherwise you didn't really have anything to populate them, and
that is obviously any that's a problem any user generated
platform is going to face. You don't have a lot
of content until you have users to generate that content.
But how do you attract the users in the first place.
(16:48):
It could have been the very end of YouTube at
that very beginning, because they had to get enough people
in there to create content to to alter the user
interface of this approach, and the founders were still sussing
out what YouTube was supposed to be because besides the
dating site idea they had already abandoned, they thought perhaps
(17:08):
that YouTube would be a place where you'd have relatively
small circles of friends and you would share videos between
the folks in that circle. In other words, the YouTube
founders had a vision for their service kind of similar
to what Twitter founders thought their users were going to want,
And it turns out that both groups weren't quite on target.
While they thought this is a place where you could
(17:29):
share videos with your close friends and family, what they
saw was that people wanted to share to the rest
of the world. It was a much grander scale than
they had anticipated. The site was still struggling to find
its place when on July four, two thousand five, Kareem
attended a Faithful Independence Day barbecue party and it was
(17:52):
hosted by a guy named Mike Greenfield. Greenfield had been
another PayPal employee back in the day. Also in attendance
of that already was a guy named Keith Rabboi or
Reboi I guess it would be the French pronunciation. He
had another PayPal employee. He had been an executive with PayPal,
and Reboi and Kareem got into a conversation about YouTube,
(18:15):
and Kareem was convinced to show off YouTube by plopping
down in Greenfield's bedroom and using Greenfield's personal computer to
check out all the videos on YouTube. They literally sat
down and watched all of them. Jawed, Kareem and Uh
and Keith Reboi, So, Keithan and Jared are sitting there
(18:38):
there watching every single video that's on YouTube these days,
If you tried that, you would never finish watching it.
There would just be too much content there. You would
die of old age before you got through it all.
But back then, on July four, two thousand five, the
entirety of all the content on YouTube consisted of about
thirty minutes worth of videos. Many of them were playing
(19:00):
is taking Off and Landing Now. Despite the lack of
compelling content, Keith saw the potential in YouTube and offered
to become an investor on the spot. And according to him,
the only other time he ever felt compelled to make
an investment that quickly was when he first heard about
the concept of Airbnb. Kareem was getting ready to leave
(19:21):
YouTube in order to pursue a PhD program at Stanford.
He would continue to serve as a consultant for YouTube
while he was going off to pursue his studies. Meanwhile,
Keith Reboise showed off YouTube to Yeah, another former PayPal employee,
this one named roll Off. Both of both had actually
worked as the chief financial officer of PayPal, so you
(19:43):
may notice this is a bunch of former PayPal folks
who were all kind of coalescing around this YouTube concept,
and in fact, without PayPal, YouTube never would have existed.
In the summer of two thousand five, Botho was working
at an investment firm called Sequoia cap at All and
both was able to help secure an initial investment in
(20:04):
YouTube through Sequoia. Now they get those investments going, they
had to change the narrative a bit of YouTube and
had it focused solely on Chen and Hurley and kind
of write Kareem out of the picture because Kareem, who
had left to continue his studies, was creating kind of
a problem. Not on purpose, it's just because of his absence.
(20:27):
The justification was that it would be really challenging to
pitch a company to potential investors if part of the
story was that one of the three founders had recently
left the company. They made YouTube sound less stable, so
they sort of erased Kareem from the history of YouTube
for the time being. He would eventually get written back
(20:48):
into that history, and he also would not complete his
postgraduate work. He never earned that PhD from Stanford. He
did earn a master's degree, and he did with Tame
Shares of YouTube, which softens the sting of not getting
that doctor in a little bit. Now. Both have created
a memo and presentation arguing for the investment into YouTube
(21:11):
for Sequoia Capital. His investment plan was to supply one
million dollars initially, followed by a four million dollars Series
A funding and in return, Sequoia Capital would get at
stake in YouTube once it emerged from Series A funding. Now,
the actual details of the funding deal once it was
concluded are a bit clouded in secrecy, but a lot
(21:34):
of the sites I research suggested the initial investment was
more like half a million dollars, with another three million
dollars investment in Series A funding in November two thousand five,
for a total of three and a half million dollars
of that initial funding. But considering what happened to the
site over the following years, any investment of around that
size was more than worth it and more than paid
(21:55):
for itself. When you talk about big gets, this one
definitely counts now. Just to backtrack a bit, in September
two thousand five, YouTube hit a milestone. The site had
its first video to hit one million views. This video
was an advertisement for Nike, and it started Brazilian soccer
(22:18):
player or football player if you prefer, named Ronald Dino.
He puts on a new pair of Nikes and then
he shows off some truly impressive ball juggling skills with
his feet before kicking the ball precisely so it hits
the goals crossbar and bounces back to him. He's standing
many yards away from the goal. It's actually really impressive
(22:39):
to me that he is so precise with his kicks.
He's juggling the ball, kicks it while it's coming down,
It hits the crossbar, bounces right back to him. He
starts juggling the ball again, does this a few more
times in a row consistently. The video itself is about
two minutes forty five seconds long, and I came to
the realization that I will never do anything in my
(23:01):
life as well as that man was able to juggle
and kick a soccer ball. You could also argue that
this was the first viral video on YouTube. It was
an advertisement and it got more than a million views.
It was pretty much a breakaway success in those early days.
Also in September two thousand five, Julie Supan left the
(23:22):
Best Buy Corporation to join YouTube as the head of
marketing for the company. Now with the founders, she brainstormed
the position YouTube wanted to take to the public, like
what were they going to portray themselves as? What was
their mission statement? And they decided that YouTube was going
to become a broadcast medium for average people. This is
(23:45):
all according to a piece that was written in mash
Double a few years ago. One thing that set YouTube
apart from many other sites was that they were deciding
to to convert video files into a standard format. See
a lot of other video sites, you had to actually
have a specific format before you could upload it. YouTube
(24:09):
would allow users to upload videos in different formats, and
then the site would take care of converting those formats
into flash, which removed that pressure from the user to
make sure the video file they were sending met some
specific criteria. There was a limit to how long a
video could be, but the file format didn't matter as much.
And when you remove that barrier, it made YouTube much
(24:29):
more user friendly and helped attract more traffic. Imagine that
you've shot a video and you want to upload it
to a service, but then you find out that you
have to use a completely different format. You would have
to convert the file, or maybe look for a different service,
or even reshoot your footage and put it into a
new file format. Before you could do that, YouTube said no, no, no,
(24:50):
We'll take whatever format you want to create your videos
in and that will do the change on our side
and post it to our flash based media player. Around
the same time, YouTube users were really starting to push
the platform's capabilities According to Time magazine, it was in
November two thousand five when the company first started seeing
(25:12):
data transfers of around eight terabytes of size every single day.
That unlimited data of land wasn't part of the picture anymore,
and so I was starting to get expensive to operate
the business. To pay for those bandwidth costs, the company
had to invest in engineers to build out the site.
They needed servers to hold all that video content, and
(25:32):
they needed data service plans to cover the cost of
the massive amounts of traffic that was hitting the site
every day. And at the time YouTube didn't really have
any monetization plans. It was clearly an up and coming service,
but it was operating at a loss. The company headquarters
weren't much to write home about either. For a while,
they were operating out of Sequoia Capital's headquarters, but the
(25:54):
company soon relocated to San Mateo, California, and they moved
into a space that was a of a pizzeria, specifically
Amichi's East Coast Pizzeria, and according to a YouTube designer
named Christina Broadbeck, the building had a real rat infestation problem.
She said the rats were cats sized, which I think
(26:14):
puts them in the category of r O U s S.
All of this was happening while the site was still
technically in beta. YouTube didn't emerge from this beta phase
until December fifteen, two thousand five. The site had used
investment money to increase the number of servers and to
improve bandwidth service to make sure using the site was
a positive experience, and over the next several months, the
(26:37):
site continued to gain users and videos. In February two
thousand six, videos on the site we're getting fifteen million
views per day, with about twenty thousand new videos being
added every single day. Now it grew not only in
content but an employee count. It also began to encounter
the first instance of intellectual property headaches for the service.
(26:59):
In February two thousand six, YouTube receive a request from
the American Broadcast Network in BC. NBC employees saw that
a clip from Saturday Night Live called Lazy Sunday was
up on YouTube. This was part of SNL's digital short
series with Andy Sandberg and Chris Parnell. Lazy Sunday had
racked up more than one point two million views NBC
(27:22):
one of the clip taken down, along with around five
other clips containing NBC content mostly from Saturday Night Live,
and YouTube would comply with the request, But later in
June two thousand six, NBC approached YouTube with a different request.
The broadcast company formed a partnership with YouTube. In June
(27:43):
two thousand six, NBC created a digital channel on YouTube,
on which it would share clips of various shows, including
special material made just for the YouTube channel. So why
did they have a change of heart? Well, part of
it might have had something to do with the fact
that NBC had come in last place among the big
four broadcast companies, the others being ABC, CBS and Fox.
(28:07):
By June two thousand and six, YouTube boasted that people
were watching approximately seventy million videos per day. That was
a valuable audience. So NBC was hoping to convert those
viewers into television viewers and to give them a little
extra material to kind of bring them in and have
them watch shows like The Office or Saturday Night Live.
(28:29):
One month later, that seventy million videos per day was
up to a hundred million videos per day. It seemed
like YouTube was unstoppable. In between those two NBC communications
came around of Series B funding, another venture capital fundraising series,
this time YouTube raised about eight million dollars from Sequoia,
(28:51):
and a video that would end up becoming the first
true mega hit on YouTube went online in that month
as well. That video was from a guy named Judson Lately,
and it was titled The Evolution of Dance. Now it's
since been surpassed. It's no longer the most watched video
of all time, but for a while it reigned supreme
(29:11):
with more than a hundred million views. I got a
lot more to say about those early days with YouTube,
but before I jump into that, let's take another quick
break to thank our sponsor. All right, back to June
(29:33):
two thousand and six. Now, that was when one of
the first successful web series on YouTube premiered, because this
would become another hallmark of YouTube was not just the
one off videos or the videos that would come from
a single creator or a group of creators, but the
actual web series where you would have an ongoing story.
This series was called Lonely Girl fifteen, and when it launched,
(29:56):
there was no indication that this was a scripted show
with an actre is portraying a fictional character at the center. Instead,
it appeared to be the genuine vlog or video diary
of a young lady named Brie. Brie was actually an
actress named Jessica Rose, and it all started off pretty
grounded and believable, mundane, even just the day to day
(30:19):
issues that a teenage lady is facing. But while it
was getting popular, the ruse did not last long. In
September two thousand six, just a few months after it launched,
it became pretty widely known that Lonely Girl fifteen was
a scripted show, that it was a performance and non
actual vlog. Once the gig was up, the show took
(30:44):
a turn for the totes crazy, with storylines involving weird
cults and quote trait positive blood end quote. Now. I
never got into the web series while it was on,
so I can't really give you my own personal opinion
about it. I was only tangentially aware that Lonely Girl
fifteen was a thing at the time. I had heard
(31:06):
about it, but never sought it out. In August two
thousand six, YouTube launched a revenue generating strategy. They called
it participatory video ads. They also introduced brand channels. This
is similar to what NBC had launched earlier that summer.
The ads would appear in the upper right corner of
YouTube homepage in a prime spot for listed videos, and
(31:29):
if you clicked on that video in that space, it
would take users to sponsored content. Advertisers could link those
videos to brand channels or two other clips on YouTube,
and the site rolled out some features that made it
easier to share links with other users, encouraging the spread
of viral videos. The brand channels could feature brand specific
logos and graphics, so each channel could be set apart
(31:53):
from the YouTube standard as well as from each other.
October was a really big month for YouTube, and two
thousand and six, first the company partnered with CBS, adding
to the sites growing influence. They had already had the
deal with NBC, and now CBS was on board. YouTube
also would launch a content i D tool, the first
(32:14):
of its kind for YouTube. This was an automated program
designed to detect material that could infringe upon copyrights, and
it also partnered with a company called Audible Magic to
develop a technology that could analyze and identify audio clips.
That way, if you uploaded a popular song against a
video that was just a static image, for example, YouTube
(32:35):
could still detected automatically and take down the video in
order to protect copyrights. This set the stage for an
enormous turn of events in the history of YouTube. In
October two thousand and six, Google made an offer that
YouTube couldn't refuse. This was an acquisition valued at about
one point six five billion dollars. YouTube employees would get
(33:01):
shares of Google stock and become rich, or at least
rich on paper. Well, that is, the ones who weren't
already rich from all that filthy PayPal money they had
received just a few years previous. And I say filthy
totally tongue in cheek. It was completely legitimate money. It
was just a whole lot of legitimate money. Now, according
(33:23):
to legal briefs that were filed as part of a
lawsuit that I'm going to talk about in just a moment,
we know that Chad Hurley made about three hundred thirty
four million dollars in Google stock due to this deal.
Steve chen was at a slightly more modest three hundred
one million dollars, and John Kareem, who had left the
company to pursue an education, received the smallest payout of
(33:47):
the three founders. His stocks were valued at somewhere around
sixty six million dollars. Not a bad haul to be honest.
Christina Broadbeck, whom I mentioned earlier as a YouTube designer,
had shares were slightly more than nine million dollars, So
it really paid off to be a YouTube employee in
October two thousand six, and in all there were between
(34:08):
fifty five and sixty five YouTube employees in total. That
was it for a one point six five billion dollar acquisition.
That's incredible. As for Google, it had already been pursuing
a streaming video strategy of its own before it purchased YouTube.
In fact, it was the second most popular video streaming
(34:29):
service that was online by a distance second, but it
was still second place. Now there were Google engineers who
were genuinely baffled at YouTube success. Google's technology allowed for
videos with much better resolution than YouTube, but the engineers
had underestimated how appealing YouTube's automatic conversion process was to
(34:51):
the average user. Because with Google's video service, you had
to use a specific video codec and provide information about
the technical details of the video of itself like its resolution.
With YouTube, all of the work was done for you.
You just had to upload the file and YouTube did
the rest. And so users had mostly ignored Google's product,
even though you could get higher quality video out of it,
(35:13):
and they flocked to YouTube instead. Google saw the writing
on the wall and thus made the move. Towards the
end of October, YouTube removed about thirty thousand videos in
an effort to respond to copyright infringement cases, and in November,
YouTube signed a deal with the National Hockey League, which
would become the first big sports deal in YouTube's history.
(35:35):
By January two thousand seven, when YouTube was not even
two years old, yet, the service was so popular that
analysts estimated the traffic to YouTube was equivalent to what
the entire Internet experienced back in two thousand so, in
other words, YouTube required as much bandwidth to operate in
two thousand seven as the entire Internet did seven years earlier.
(35:59):
Of course, other services like Netflix would later follow suit
with similar kind of mind blowing statistics. In March two
thousand seven, YouTube became the target of a massive lawsuit,
the one I alluded to earlier. The plaintiff was Viacom.
This is the cable company that owned brands like Nickelodeon
and MTV. The lawsuit was to the tune of one
(36:22):
billion dollars in damages, and it all centered on Viacom's
claim that YouTube and by extension, Google, had failed to
act appropriately when it came to protecting intellectual property. Basically,
the lawsuit argued that YouTube was allowing users to upload
media that didn't belong to them, costing media companies millions
of dollars of loss of revenues in the process. Now,
(36:45):
this is a tricky situation for multiple reasons. For one,
YouTube was on the receiving end of thousands of videos
every day, so checking each one for evidence of copyright
infringement was not easy. Specifically, it wasn't easy to you
manually or not even possible manually, so you had to
rely on automatic approaches, and algorithms could be tricked. You
(37:07):
might have seen a YouTube video here or there on
a popular television show, or a movie or music video
or something along those lines, and noticed that everything seems
to be flipped with like backwards writing and other clues.
Now that could be an indication that the uploader made
that flip with editing software in an attempt to fool
any content recognition algorithms because they're looking for the reverse
(37:29):
version of that. But it's also tricky because arguing that
piracy results directly and lost revenues is impossible to prove.
The argument seems to say, this person over here watched
unauthorized copies of our content on YouTube, and they should
have just purchased those copies. If the unauthorized copies didn't exist,
(37:51):
then that person would have bought a legitimate copy. But
here's the thing, it's impossible to prove that someone would
actually follow through with that. Further, it's impossible to say
that some of the people who saw the unauthorized copies
didn't go out and buy legitimate copies of the content
later on, or maybe they already owned a legitimate copy
(38:11):
of the content, but they were using YouTube to access
the content without getting their personal copy out from wherever
they had stored it. So, in short, it's impossible to
prove the extent to which piracy impacts revenue. To add
to that, there were suspicions that people at YouTube, just
before the acquisition with Google, started to boost YouTube's numbers
(38:33):
by allowing this unauthorized material to be uploaded to the site.
In other words, they were patting the value of the
service by allowing some shady stuff to go on, and
then once the site got acquired it was no longer
their problem. That's a pretty cynical way of looking about it,
but it was something that a lot of people were
floating by at the time. YouTube, for its part, cited
(38:57):
the Digital Millennium Copyright Act and claimed that the company
had been following the rules set out by the d
m c A. The lawsuit would stretch out over seven years,
only concluding in two thousand fourteen when the parties settled
out of court. This followed two different setbacks for Viacom.
(39:18):
The first had happened in when Judge Louis Stanton ruled
favorably mostly for Google. Viacom would appeal that decision. It
was sent to a federal appeals court, but they sent
it back down to a different court, a court that
was once again presided over by Judge Stanton, the guy
who had said that Google was mostly in the right
(39:40):
back in and Stanton gave essentially the same ruling in.
Then Viacom would appeal that decision, and that's when they
two companies were scheduled to meet in fen before they
reached this settlement, which was never made public, so we
don't actually know what money changed hands in the process.
Us The general opinion in the text sphere seemed to
(40:04):
be that Viacom didn't really have much of a case.
The d m c A offers up a concept called
safe harbor. Safe harbor is a protection for services like
YouTube and other platforms that allows users to contribute content
to that platform. The basic idea is that if you
have a platform and you let your users create the content,
(40:24):
you are not responsible for the stuff other people upload
to your platform because you didn't create that content. Your
users didn't. You just gave them a space for them
to put their stuff. In addition, YouTube had tools that
would automatically seek out instances of copyright infringement, and the
company provided processes through which intellectual property owners could post
(40:45):
claims against material that they said infringed on their intellectual property.
So those processes could be anything from redirecting monetization so
in other words, someone else uploads a copy of a
movie that you made, you could, as the owner of
that intellectual property, choose to turn monetization off so they
can't make any money off of it, or even redirect
(41:07):
that monetization so any money they would have made goes
to you, or you could actually demanded that video be
removed and would be taken down off of YouTube. That
tool by the way, has been the center of much
debate and controversy, as over zealous content owners have abused
it in the past, sometimes even using it to take
down their own videos that they put up in an
(41:29):
effort to protect their intellectual property. I'll chat about that
more in the next episode. I'm sure now, even though
we don't really know what happened with that, I think
we could say that at least YouTube from outward appearances
could claim that they were in all good faith pursuing
the processes necessary to protect other people's intellectual property. Whether
(41:52):
they were really doing that to their fullest extent, that's
still a matter of debate. H I like to take
people at their word. But the same time, I figure
if I ran a company that was worth billions of dollars,
I might claim that I was doing everything I could
to be on the up and up and not worry
so much about whether that was true. But I'm not
in that position. If someone would like to put me
(42:14):
in that position and test my moral fiber, I welcome it.
Send your billion dollars to how stuff works care of
Jonathan Strickland, And I cannot stress how important that last
bid is, because if Josh gets his grubby hands on it,
I'll never see it. All right, I'm gonna end this
episode with a quick rundown of another feature that really
(42:34):
transformed YouTube and opened up a world of opportunities for
a select few individuals, particularly in the early days, and
that is the YouTube Partner Program. This was YouTube strategy
that made it possible for the average person to launch
a channel and to monetize it. Now. Previously that was
something only the brand channels could do big big media companies,
(42:55):
But now it is possible for a person to become
an Internet celebrity and act really make money off of it. Now.
I've often mentioned to my friends who claim I'm Internet
famous that that kind of fame is largely useless. First
of all, I'm not really famous. Second, what little fame
I do have, I can't leverage in any remotely useful way.
(43:17):
I can't even get a good table at a restaurant
with it. But YouTube's partner program gave a few folks
the shot at making a living by creating online videos,
and before long a small number of YouTubers began to
earn decent some amounts of money, sometimes more than decent,
like up to six figures a year making videos. We
(43:39):
also started seeing more viral videos coming from people who
could create a compelling share double video. There tons of
examples of viral videos and YouTube's history, and we often
saw some of those same people attempt, often unsuccessfully, to
repeat that experience by creating more videos similar ones to
the ones that got a big hit. And it became
(44:01):
clear that hitting a home run with a viral video
once it was not a guarantee that you'd ever end
up with a sustainable business. Though if your video was
popular enough, you could still make some decent cash off
of a single shot. It might just take a while
and be spread out over several years. And that brings
us up to early two thousand seven. Obviously, we've got
(44:23):
a lot more to talk about in the history of
YouTube to bring us up to date, so in our
next episode, we'll look at how YouTube has expanded in
the last decade, as well as some of the controversies
surrounding the company. Will explore the bizarre world of the
YouTube kids app, which has had some truly David lynche
In scale weirdness going on with it, and we'll also
(44:44):
take a closer look at some of the battles between
content creators and the various intellectual property claims that have
happened over the past several years. Meanwhile, if you guys
have suggestions for other topics I should cover here on
tech Stuff, you should let me know about them. One
way you can do that is sending me an email.
The addresses tech Stuff at how stuff Works dot com,
or you can drop me a line on Facebook or Twitter.
(45:06):
The handle for the show at both of those is
text Stuff HSW Remember on Wednesdays and Fridays, I record
this show and I stream it live. If you want
to see the show early and find out what's cool
in tech, sometimes more than a week before everyone else does,
just go to twitch dot tv slash tech Stuff. The
schedules up there and you can join the chat room
(45:28):
and chat with me and and watch as I make
gooflem ups in between takes it happens. I hope you
enjoyed this episode. I look forward to talking to you
with more about YouTube and kind of exploring how that
site has evolved ever since Google took possession of it,
and uh, I look forward to hearing from you guys,
(45:49):
finding out what you want me to talk about in
the future. Remember, it can be any sort of topic.
It can be a technology, could be a company, could
be a personality in tech. Maybe there's someone you want
me to interview on the show, or me to be there,
someone you want as a guest host for an episode.
Give me a shout and let me know and I
will talk to you again. Release soon for more on
(46:14):
this and thousands of other topics. Is it how staff
works dot com
Technology with tech Stuff from works dot com. Hey there,
and welcome to text Stuff. I am your host, Jonathan Strickland,
executive producer, here at how Stuff Works, and today I
thought we'd take a look at one of the most
influential sites on the Internet. In fact, it's the second
(00:26):
largest search engine on the Web. And if you haven't
looked at the title of this episode, you might be
thinking I'm talking about Yahoo or something, but nope, I'm
talking about YouTube. It's a site that has recently been
in the spotlight for lots of not so great reasons,
but we'll get into those a bit later. And I
should mention this is part one of a multipart episode,
(00:48):
and as of the recording, I'm not exactly sure how
many episodes this is going to end up being in total,
but I suspect it will be too. I'll let you
know more in our next episode after I've those notes done.
But today, YouTube is the dominant player in online video content.
Users watch, share, and upload hours of videos every moment,
(01:12):
So we're gonna take a look at how YouTube got
it start, how it rose to prominence, and some of
the stories and scandals that have shaped it along the way.
So let's start at the very beginning, which I am
told through song is a very good place to start,
and that would be at PayPal. Now. PayPal, to back
(01:33):
up even further, was founded partially by two other companies.
Peter Thiel, Ken Howary Luke Nozack and Max Levchin created
a service called Confinity. Like today's PayPal, this was a
money transferring platform, and in two thousand, Confinity merged with
(01:55):
an online banking site called x dot com, which was
co created by Elon Musk. So already we've got some
really big names involved in this story, namely Peter Thiel
and Elon Musk. Really, the news service became known as
PayPal shortly thereafter, and by two thousand two had attracted
attention from a little company called eBay. eBay moved to
(02:16):
a choir PayPal for the princely sum of one and
a half billion with a B dollars. Now, this acquisition
made a lot of people really rich. Or let's get
real here for a second. People, it made some people
rich and other people it made way more rich than
(02:39):
they already were. Because I hate to tell you this,
but the fairy tale of the developer who comes from
nothing and then becomes a millionaire isn't nearly as common
as we would all like to think. Often it's more
like rich person goes and does things and gets more rich.
But that's a topic for another show on another podcast.
(03:01):
Really now, two former employees of PayPal, Chad Hurley and
Steve Chen, were shooting the breeze at Chen's then new
San Francisco home, and I like to imagine they were
having money fights with each other, throwing balls of cash around.
That's probably not accurate. They did shoot some video while
(03:22):
they were hanging out, and then they lamented that sharing
video online was unreasonably hard. The Internet and the Web
had started to transform everything, but it was still difficult
to get video to anyone. This is the era before
the smartphone, so for one thing, we didn't all have
video cameras in our pockets. And it was the era
(03:45):
before anyone had created a really dependable platform upon which
you could upload and share video that could get a
lot of traction. Meanwhile, there was a third former PayPal
employee named Jawed Catam who was lamenting that there was
no easy way to find videos of specific events online.
(04:07):
He was thinking about some events that had really made
the news and you should be able to find video
of those events online, But unlike other sources on the
other types of media, there was no really good way
of searching for video. So you could find news reports
or sometimes images, but you couldn't necessarily find video clips. Now,
(04:28):
there were two events in particular that he cites as
being sort of the inspiration for thinking about this, and
one of them is is a catastrophe, and the other
one not as much, although it was treated as a
catastrophe at the time. So the two events he cited
in an interview in two thousand six were the moment
(04:49):
during the halftime show of the two thousand four Super Bowl.
That moment the moment in which Janet Jackson's breast was
exposed during what was later called a wardrobe malfunction. So
that was the first event he cited as one of
the reasons he wanted to create a platform that would
be easier to share video because he couldn't find video
(05:10):
of that event. And the other was a tsunami that
had devastated places like Indonesia, Sri Lanka, Thailand, and India,
and he knew that there were a lot of people
who had captured video footage of the tsunami and that
video footage could be really valuable for people and educational
(05:30):
for people, but there was no easy way to search
for it. You couldn't find it anywhere. And he knew
that there were other events like this, but again there
was no way to find them. So he would end
up having a meeting with Chen and Hurley, the two
guys I mentioned earlier, and talk about this problem, and
they were all kind of going over this same issue. Now.
There was no platform at that time where you could
(05:52):
easily upload a video and other people could go there
to watch it that really gained traction. There were a
lot of little sites, but no one had really come
to the forefront. When it came to video online, your
options were pretty much limited. You might host a file
on a server and people could visit a website and
download the file to their own machine. That's not terribly
(06:15):
user friendly and it took a long time and still
let's somehow. That's how some of the earliest web series
like Red Versus Blue from Rooster Teeth distributed their content
in the early days, is that you would actually pop
onto their site, download a file when it became available,
and then on your computer at home you would launched
the video in a video player program that was compatible
(06:36):
with whatever file format the content creator was using. It's
not the smoothest experience. You can also create a web
based video player using one of several different proprietary formats,
which just made things more confusing. Microsoft had Active Movie,
which was a media player that launched in Nix and
(06:57):
allowed streaming media. Real Player had launched their application the
following year in and Apple would follow suit in n
with quick Time four and their streaming media format, So
there were a few solutions out there if you wanted
to host streaming video on a site, but it was
still not the greatest experience in the world from a
(07:17):
user perspective because most people were relying upon dial up modems,
so it was really slow to access anything. They had
to download whatever the applicable movie playing program was and
have that stored on their machine, and streaming video was
just hard to do without all those annoying buffering issues.
So still not very great now. Those solutions also, again
(07:42):
we're not entirely based on the web. You had to
have that program, so first you have to go and
download your Active movie player, and then you would have
to access the website that actually has the streaming content
on it, and if you went to a different site
that had say quick Time for streaming content on it,
you would have to get a totally different later because
they were incompatible formats. This proprietary approach was fragmenting the
(08:05):
experience and that's never really satisfying from a user perspective.
In two thousand two, Adobes Flash product came along, and
that simplified things because people began to adopt that as
this standard for streaming technology at the time. And a
couple of years later, more people had access to broadband speeds,
making streaming video a viable option that didn't always include
(08:27):
ages of buffering time. So you had sort of this
convergence of different events that were making it easier to
have a streaming video service. You had Flash coming about,
which gave a lot more versatility to streaming video, and
you had the fact that more than half of American
(08:49):
households had access to what was then considered broadband speeds,
which was much lower than what we consider broadband today.
So in early two thousand five things were kind of
falling into place. It was the right time to look
into creating a platform in which users could upload video
footage and watch other video clips. It would become parts
(09:12):
social platform, parts search engine, and the three felt they
were onto something and began to have some serious discussions
about what it would take to launch such a platform.
So who are these guys? Well, Steve Chen was born
in nineteen seventy eight in Taipei, Taiwan. His family moved
to Chicago, Illinois, when Chen was fifteen years old. He
(09:33):
attended the University of Illinois Champagne, Urbana. This was a
school that had some pretty notable alumni, particularly in the
field of computer science. For example Mark Andreson, who would
go on to co create the first commercially successful web browser, Mosaic.
He went there. Chen was interested in coding and graduated
(09:53):
from the university and moved on to work for PayPal,
and he would end up meeting Chad Hurley on his
first day on the job. Hurley was born in nineteen
seventy seven in Birdsboro, Pennsylvania. He studied fine art at
the University of Pennsylvania, and he leveraged his artistic abilities
to help design user interfaces and join PayPal to work
(10:15):
on its UI. And that's really important. We often will
not really consider how challenging it is to create a
user interface that is clear. It gives the user very
uh simple instructions on how to use the service, and
(10:36):
there's not a lot of clutter there. It's actually a
lot more challenging to do than you would think. And
so Hurley came from this from a fine arts perspective,
which is pretty interesting to me. Jawad Karnem was born
in nineteen seventy nine and East Germany and his family
moved to West Germany in nineteen eighty, which was a
thing back then because there used to be an East
(10:57):
and West Germany. I remember those His parents were scientists
and researchers. They moved to the United States in nineteen
Kareem would attend the University of Illinois along with Chen,
although he didn't actually meet Chen while attending the school,
and he dropped out before graduating in order to go
work at PayPal. Now, according to the sources I research,
(11:19):
Kareem didn't meet up with Chen until they were both
at that company, until they were both at PayPal, though
they again did attend the same university. Kareem would later
leave YouTube and finish his studies first, though he would
graduate in two thousand and four with his undergraduate degree.
He would leave YouTube later on and pursue post graduate degrees,
and early on he was frequently left out of stories
(11:41):
about YouTube's rise to success, though that was later rectified.
And I'll talk a little bit about why he was
kind of written out of the history and just a
little bit. Oh and uh. Like I said, YouTube wasn't
their first go at a video platform service. There was
an earlier failed concept that I think I should address.
The original video platform concept before they settled on YouTube
(12:05):
was one that Chen Hurley and Kaream called tune In
hook Up and yes, it was meant to be a
dating website. Users were supposed to post videos of themselves
and Peru's other videos, all in the name of finding
a certain special someone with whom you could then hook up.
According to Kareem in an interview in two thousand sixteen,
(12:27):
the founders even trolled through Craigslist personal ads and offered
women twenty dollars to upload videos of themselves to this
service in order to populate it, but they found zero takers. Anyway,
that particular startup fizzled, but the three founders saw possibilities
in using the video platform technology a different way, And
(12:48):
on February two thousand five Valentine's Day, which Kareem would
later say was to a coder, just a normal day,
which I think is just a sly remark on the
personal lives of your typical coders, the team pivoted away
from this concept of tune in hook up and they
pivoted toward YouTube. Hurley registered the trademark for the logo
(13:13):
and the domain of the site on that day. Their
new platform would be one where people could upload videos
about whatever subjects they like within reason, and I wouldn't
have a narrow focus on dating like their original concept,
but rather serve as a general video publication and consumption site.
But would it work well? They weren't sure. Chinn and
(13:33):
Kareem were focused on creating the technical platform for the service,
while Hurley concentrated on the user interface and the logo
design for the site. The team built out the infrastructure
for the service, and the first video to officially hit
YouTube would not go up until April two thousand five. Now,
I'm sure a lot of you already know the name
(13:53):
of that video because it is a piece of Internet history,
But just in case you don't and you some pub
trivia knowledge in your back pocket. The title of the
very first video upload to YouTube was Me at the
Zoo and it's a video of Jawad Kareem standing in
front of an elephant enclosure at the San Diego Zoo
(14:14):
and it published on April two thousand five. As of
the recording of this podcast, it has accumulated more than
forty four million, five hundred thousand views. It lasts eighteen
seconds long and contains the important information that elephants are
really cool because they have really long trunks. And while
(14:35):
I'm poking some fun at the content of the video,
the important thing was it was a piece of content
that could be tested out on the platform itself. What
was in the video wasn't nearly as important as the
fact that this was the first video to go live
on an official YouTube server it would ultimately face the public.
This wasn't just some random test video on a server
(14:56):
that was never going to be forward facing and only
be used by developers. This was the first actual YouTube video,
and that is why it is significant. Now. I have
a lot more to say about YouTube in those early days,
but before I get into that, let's take a quick
break to thank our sponsor. All right, it's two thousand
(15:21):
five April. YouTube still was not yet open for the public. Essentially,
in late April early May two five, the company launched
its beta home page. They had secured a deal with
an internet service provider called Server Server Beach, and the
deal was for an unlimited data plan for a hundred
(15:41):
and twenty nine dollars a month. The earliest incarnation of
YouTube wasn't exactly a home run. Kareem said that their
original version of the site didn't let users select which
videos to watch. Imagine that going to YouTube, but you
have no control over what video is going to play. Instead,
(16:02):
it was a Russian roulette style of experience. You'd go
to the site and it would randomly serve up one
of the videos stored on its servers. And because there
were relatively few videos available and meant you were likely
to see a lot of the same stuff, it wasn't
the sort of experience that would lead people to coming
back for more. And in fact, Karim himself had gone
to airports and filmed planes landing and taking off just
(16:26):
to have more content to throw into the servers, because
otherwise you didn't really have anything to populate them, and
that is obviously any that's a problem any user generated
platform is going to face. You don't have a lot
of content until you have users to generate that content.
But how do you attract the users in the first place.
(16:48):
It could have been the very end of YouTube at
that very beginning, because they had to get enough people
in there to create content to to alter the user
interface of this approach, and the founders were still sussing
out what YouTube was supposed to be because besides the
dating site idea they had already abandoned, they thought perhaps
(17:08):
that YouTube would be a place where you'd have relatively
small circles of friends and you would share videos between
the folks in that circle. In other words, the YouTube
founders had a vision for their service kind of similar
to what Twitter founders thought their users were going to want,
And it turns out that both groups weren't quite on target.
While they thought this is a place where you could
(17:29):
share videos with your close friends and family, what they
saw was that people wanted to share to the rest
of the world. It was a much grander scale than
they had anticipated. The site was still struggling to find
its place when on July four, two thousand five, Kareem
attended a Faithful Independence Day barbecue party and it was
(17:52):
hosted by a guy named Mike Greenfield. Greenfield had been
another PayPal employee back in the day. Also in attendance
of that already was a guy named Keith Rabboi or
Reboi I guess it would be the French pronunciation. He
had another PayPal employee. He had been an executive with PayPal,
and Reboi and Kareem got into a conversation about YouTube,
(18:15):
and Kareem was convinced to show off YouTube by plopping
down in Greenfield's bedroom and using Greenfield's personal computer to
check out all the videos on YouTube. They literally sat
down and watched all of them. Jawed, Kareem and Uh
and Keith Reboi, So, Keithan and Jared are sitting there
(18:38):
there watching every single video that's on YouTube these days,
If you tried that, you would never finish watching it.
There would just be too much content there. You would
die of old age before you got through it all.
But back then, on July four, two thousand five, the
entirety of all the content on YouTube consisted of about
thirty minutes worth of videos. Many of them were playing
(19:00):
is taking Off and Landing Now. Despite the lack of
compelling content, Keith saw the potential in YouTube and offered
to become an investor on the spot. And according to him,
the only other time he ever felt compelled to make
an investment that quickly was when he first heard about
the concept of Airbnb. Kareem was getting ready to leave
(19:21):
YouTube in order to pursue a PhD program at Stanford.
He would continue to serve as a consultant for YouTube
while he was going off to pursue his studies. Meanwhile,
Keith Reboise showed off YouTube to Yeah, another former PayPal employee,
this one named roll Off. Both of both had actually
worked as the chief financial officer of PayPal, so you
(19:43):
may notice this is a bunch of former PayPal folks
who were all kind of coalescing around this YouTube concept,
and in fact, without PayPal, YouTube never would have existed.
In the summer of two thousand five, Botho was working
at an investment firm called Sequoia cap at All and
both was able to help secure an initial investment in
(20:04):
YouTube through Sequoia. Now they get those investments going, they
had to change the narrative a bit of YouTube and
had it focused solely on Chen and Hurley and kind
of write Kareem out of the picture because Kareem, who
had left to continue his studies, was creating kind of
a problem. Not on purpose, it's just because of his absence.
(20:27):
The justification was that it would be really challenging to
pitch a company to potential investors if part of the
story was that one of the three founders had recently
left the company. They made YouTube sound less stable, so
they sort of erased Kareem from the history of YouTube
for the time being. He would eventually get written back
(20:48):
into that history, and he also would not complete his
postgraduate work. He never earned that PhD from Stanford. He
did earn a master's degree, and he did with Tame
Shares of YouTube, which softens the sting of not getting
that doctor in a little bit. Now. Both have created
a memo and presentation arguing for the investment into YouTube
(21:11):
for Sequoia Capital. His investment plan was to supply one
million dollars initially, followed by a four million dollars Series
A funding and in return, Sequoia Capital would get at
stake in YouTube once it emerged from Series A funding. Now,
the actual details of the funding deal once it was
concluded are a bit clouded in secrecy, but a lot
(21:34):
of the sites I research suggested the initial investment was
more like half a million dollars, with another three million
dollars investment in Series A funding in November two thousand five,
for a total of three and a half million dollars
of that initial funding. But considering what happened to the
site over the following years, any investment of around that
size was more than worth it and more than paid
(21:55):
for itself. When you talk about big gets, this one
definitely counts now. Just to backtrack a bit, in September
two thousand five, YouTube hit a milestone. The site had
its first video to hit one million views. This video
was an advertisement for Nike, and it started Brazilian soccer
(22:18):
player or football player if you prefer, named Ronald Dino.
He puts on a new pair of Nikes and then
he shows off some truly impressive ball juggling skills with
his feet before kicking the ball precisely so it hits
the goals crossbar and bounces back to him. He's standing
many yards away from the goal. It's actually really impressive
(22:39):
to me that he is so precise with his kicks.
He's juggling the ball, kicks it while it's coming down,
It hits the crossbar, bounces right back to him. He
starts juggling the ball again, does this a few more
times in a row consistently. The video itself is about
two minutes forty five seconds long, and I came to
the realization that I will never do anything in my
(23:01):
life as well as that man was able to juggle
and kick a soccer ball. You could also argue that
this was the first viral video on YouTube. It was
an advertisement and it got more than a million views.
It was pretty much a breakaway success in those early days.
Also in September two thousand five, Julie Supan left the
(23:22):
Best Buy Corporation to join YouTube as the head of
marketing for the company. Now with the founders, she brainstormed
the position YouTube wanted to take to the public, like
what were they going to portray themselves as? What was
their mission statement? And they decided that YouTube was going
to become a broadcast medium for average people. This is
(23:45):
all according to a piece that was written in mash
Double a few years ago. One thing that set YouTube
apart from many other sites was that they were deciding
to to convert video files into a standard format. See
a lot of other video sites, you had to actually
have a specific format before you could upload it. YouTube
(24:09):
would allow users to upload videos in different formats, and
then the site would take care of converting those formats
into flash, which removed that pressure from the user to
make sure the video file they were sending met some
specific criteria. There was a limit to how long a
video could be, but the file format didn't matter as much.
And when you remove that barrier, it made YouTube much
(24:29):
more user friendly and helped attract more traffic. Imagine that
you've shot a video and you want to upload it
to a service, but then you find out that you
have to use a completely different format. You would have
to convert the file, or maybe look for a different service,
or even reshoot your footage and put it into a
new file format. Before you could do that, YouTube said no, no, no,
(24:50):
We'll take whatever format you want to create your videos
in and that will do the change on our side
and post it to our flash based media player. Around
the same time, YouTube users were really starting to push
the platform's capabilities According to Time magazine, it was in
November two thousand five when the company first started seeing
(25:12):
data transfers of around eight terabytes of size every single day.
That unlimited data of land wasn't part of the picture anymore,
and so I was starting to get expensive to operate
the business. To pay for those bandwidth costs, the company
had to invest in engineers to build out the site.
They needed servers to hold all that video content, and
(25:32):
they needed data service plans to cover the cost of
the massive amounts of traffic that was hitting the site
every day. And at the time YouTube didn't really have
any monetization plans. It was clearly an up and coming service,
but it was operating at a loss. The company headquarters
weren't much to write home about either. For a while,
they were operating out of Sequoia Capital's headquarters, but the
(25:54):
company soon relocated to San Mateo, California, and they moved
into a space that was a of a pizzeria, specifically
Amichi's East Coast Pizzeria, and according to a YouTube designer
named Christina Broadbeck, the building had a real rat infestation problem.
She said the rats were cats sized, which I think
(26:14):
puts them in the category of r O U s S.
All of this was happening while the site was still
technically in beta. YouTube didn't emerge from this beta phase
until December fifteen, two thousand five. The site had used
investment money to increase the number of servers and to
improve bandwidth service to make sure using the site was
a positive experience, and over the next several months, the
(26:37):
site continued to gain users and videos. In February two
thousand six, videos on the site we're getting fifteen million
views per day, with about twenty thousand new videos being
added every single day. Now it grew not only in
content but an employee count. It also began to encounter
the first instance of intellectual property headaches for the service.
(26:59):
In February two thousand six, YouTube receive a request from
the American Broadcast Network in BC. NBC employees saw that
a clip from Saturday Night Live called Lazy Sunday was
up on YouTube. This was part of SNL's digital short
series with Andy Sandberg and Chris Parnell. Lazy Sunday had
racked up more than one point two million views NBC
(27:22):
one of the clip taken down, along with around five
other clips containing NBC content mostly from Saturday Night Live,
and YouTube would comply with the request, But later in
June two thousand six, NBC approached YouTube with a different request.
The broadcast company formed a partnership with YouTube. In June
(27:43):
two thousand six, NBC created a digital channel on YouTube,
on which it would share clips of various shows, including
special material made just for the YouTube channel. So why
did they have a change of heart? Well, part of
it might have had something to do with the fact
that NBC had come in last place among the big
four broadcast companies, the others being ABC, CBS and Fox.
(28:07):
By June two thousand and six, YouTube boasted that people
were watching approximately seventy million videos per day. That was
a valuable audience. So NBC was hoping to convert those
viewers into television viewers and to give them a little
extra material to kind of bring them in and have
them watch shows like The Office or Saturday Night Live.
(28:29):
One month later, that seventy million videos per day was
up to a hundred million videos per day. It seemed
like YouTube was unstoppable. In between those two NBC communications
came around of Series B funding, another venture capital fundraising series,
this time YouTube raised about eight million dollars from Sequoia,
(28:51):
and a video that would end up becoming the first
true mega hit on YouTube went online in that month
as well. That video was from a guy named Judson Lately,
and it was titled The Evolution of Dance. Now it's
since been surpassed. It's no longer the most watched video
of all time, but for a while it reigned supreme
(29:11):
with more than a hundred million views. I got a
lot more to say about those early days with YouTube,
but before I jump into that, let's take another quick
break to thank our sponsor. All right, back to June
(29:33):
two thousand and six. Now, that was when one of
the first successful web series on YouTube premiered, because this
would become another hallmark of YouTube was not just the
one off videos or the videos that would come from
a single creator or a group of creators, but the
actual web series where you would have an ongoing story.
This series was called Lonely Girl fifteen, and when it launched,
(29:56):
there was no indication that this was a scripted show
with an actre is portraying a fictional character at the center. Instead,
it appeared to be the genuine vlog or video diary
of a young lady named Brie. Brie was actually an
actress named Jessica Rose, and it all started off pretty
grounded and believable, mundane, even just the day to day
(30:19):
issues that a teenage lady is facing. But while it
was getting popular, the ruse did not last long. In
September two thousand six, just a few months after it launched,
it became pretty widely known that Lonely Girl fifteen was
a scripted show, that it was a performance and non
actual vlog. Once the gig was up, the show took
(30:44):
a turn for the totes crazy, with storylines involving weird
cults and quote trait positive blood end quote. Now. I
never got into the web series while it was on,
so I can't really give you my own personal opinion
about it. I was only tangentially aware that Lonely Girl
fifteen was a thing at the time. I had heard
(31:06):
about it, but never sought it out. In August two
thousand six, YouTube launched a revenue generating strategy. They called
it participatory video ads. They also introduced brand channels. This
is similar to what NBC had launched earlier that summer.
The ads would appear in the upper right corner of
YouTube homepage in a prime spot for listed videos, and
(31:29):
if you clicked on that video in that space, it
would take users to sponsored content. Advertisers could link those
videos to brand channels or two other clips on YouTube,
and the site rolled out some features that made it
easier to share links with other users, encouraging the spread
of viral videos. The brand channels could feature brand specific
logos and graphics, so each channel could be set apart
(31:53):
from the YouTube standard as well as from each other.
October was a really big month for YouTube, and two
thousand and six, first the company partnered with CBS, adding
to the sites growing influence. They had already had the
deal with NBC, and now CBS was on board. YouTube
also would launch a content i D tool, the first
(32:14):
of its kind for YouTube. This was an automated program
designed to detect material that could infringe upon copyrights, and
it also partnered with a company called Audible Magic to
develop a technology that could analyze and identify audio clips.
That way, if you uploaded a popular song against a
video that was just a static image, for example, YouTube
(32:35):
could still detected automatically and take down the video in
order to protect copyrights. This set the stage for an
enormous turn of events in the history of YouTube. In
October two thousand and six, Google made an offer that
YouTube couldn't refuse. This was an acquisition valued at about
one point six five billion dollars. YouTube employees would get
(33:01):
shares of Google stock and become rich, or at least
rich on paper. Well, that is, the ones who weren't
already rich from all that filthy PayPal money they had
received just a few years previous. And I say filthy
totally tongue in cheek. It was completely legitimate money. It
was just a whole lot of legitimate money. Now, according
(33:23):
to legal briefs that were filed as part of a
lawsuit that I'm going to talk about in just a moment,
we know that Chad Hurley made about three hundred thirty
four million dollars in Google stock due to this deal.
Steve chen was at a slightly more modest three hundred
one million dollars, and John Kareem, who had left the
company to pursue an education, received the smallest payout of
(33:47):
the three founders. His stocks were valued at somewhere around
sixty six million dollars. Not a bad haul to be honest.
Christina Broadbeck, whom I mentioned earlier as a YouTube designer,
had shares were slightly more than nine million dollars, So
it really paid off to be a YouTube employee in
October two thousand six, and in all there were between
(34:08):
fifty five and sixty five YouTube employees in total. That
was it for a one point six five billion dollar acquisition.
That's incredible. As for Google, it had already been pursuing
a streaming video strategy of its own before it purchased YouTube.
In fact, it was the second most popular video streaming
(34:29):
service that was online by a distance second, but it
was still second place. Now there were Google engineers who
were genuinely baffled at YouTube success. Google's technology allowed for
videos with much better resolution than YouTube, but the engineers
had underestimated how appealing YouTube's automatic conversion process was to
(34:51):
the average user. Because with Google's video service, you had
to use a specific video codec and provide information about
the technical details of the video of itself like its resolution.
With YouTube, all of the work was done for you.
You just had to upload the file and YouTube did
the rest. And so users had mostly ignored Google's product,
even though you could get higher quality video out of it,
(35:13):
and they flocked to YouTube instead. Google saw the writing
on the wall and thus made the move. Towards the
end of October, YouTube removed about thirty thousand videos in
an effort to respond to copyright infringement cases, and in November,
YouTube signed a deal with the National Hockey League, which
would become the first big sports deal in YouTube's history.
(35:35):
By January two thousand seven, when YouTube was not even
two years old, yet, the service was so popular that
analysts estimated the traffic to YouTube was equivalent to what
the entire Internet experienced back in two thousand so, in
other words, YouTube required as much bandwidth to operate in
two thousand seven as the entire Internet did seven years earlier.
(35:59):
Of course, other services like Netflix would later follow suit
with similar kind of mind blowing statistics. In March two
thousand seven, YouTube became the target of a massive lawsuit,
the one I alluded to earlier. The plaintiff was Viacom.
This is the cable company that owned brands like Nickelodeon
and MTV. The lawsuit was to the tune of one
(36:22):
billion dollars in damages, and it all centered on Viacom's
claim that YouTube and by extension, Google, had failed to
act appropriately when it came to protecting intellectual property. Basically,
the lawsuit argued that YouTube was allowing users to upload
media that didn't belong to them, costing media companies millions
of dollars of loss of revenues in the process. Now,
(36:45):
this is a tricky situation for multiple reasons. For one,
YouTube was on the receiving end of thousands of videos
every day, so checking each one for evidence of copyright
infringement was not easy. Specifically, it wasn't easy to you
manually or not even possible manually, so you had to
rely on automatic approaches, and algorithms could be tricked. You
(37:07):
might have seen a YouTube video here or there on
a popular television show, or a movie or music video
or something along those lines, and noticed that everything seems
to be flipped with like backwards writing and other clues.
Now that could be an indication that the uploader made
that flip with editing software in an attempt to fool
any content recognition algorithms because they're looking for the reverse
(37:29):
version of that. But it's also tricky because arguing that
piracy results directly and lost revenues is impossible to prove.
The argument seems to say, this person over here watched
unauthorized copies of our content on YouTube, and they should
have just purchased those copies. If the unauthorized copies didn't exist,
(37:51):
then that person would have bought a legitimate copy. But
here's the thing, it's impossible to prove that someone would
actually follow through with that. Further, it's impossible to say
that some of the people who saw the unauthorized copies
didn't go out and buy legitimate copies of the content
later on, or maybe they already owned a legitimate copy
(38:11):
of the content, but they were using YouTube to access
the content without getting their personal copy out from wherever
they had stored it. So, in short, it's impossible to
prove the extent to which piracy impacts revenue. To add
to that, there were suspicions that people at YouTube, just
before the acquisition with Google, started to boost YouTube's numbers
(38:33):
by allowing this unauthorized material to be uploaded to the site.
In other words, they were patting the value of the
service by allowing some shady stuff to go on, and
then once the site got acquired it was no longer
their problem. That's a pretty cynical way of looking about it,
but it was something that a lot of people were
floating by at the time. YouTube, for its part, cited
(38:57):
the Digital Millennium Copyright Act and claimed that the company
had been following the rules set out by the d
m c A. The lawsuit would stretch out over seven years,
only concluding in two thousand fourteen when the parties settled
out of court. This followed two different setbacks for Viacom.
(39:18):
The first had happened in when Judge Louis Stanton ruled
favorably mostly for Google. Viacom would appeal that decision. It
was sent to a federal appeals court, but they sent
it back down to a different court, a court that
was once again presided over by Judge Stanton, the guy
who had said that Google was mostly in the right
(39:40):
back in and Stanton gave essentially the same ruling in.
Then Viacom would appeal that decision, and that's when they
two companies were scheduled to meet in fen before they
reached this settlement, which was never made public, so we
don't actually know what money changed hands in the process.
Us The general opinion in the text sphere seemed to
(40:04):
be that Viacom didn't really have much of a case.
The d m c A offers up a concept called
safe harbor. Safe harbor is a protection for services like
YouTube and other platforms that allows users to contribute content
to that platform. The basic idea is that if you
have a platform and you let your users create the content,
(40:24):
you are not responsible for the stuff other people upload
to your platform because you didn't create that content. Your
users didn't. You just gave them a space for them
to put their stuff. In addition, YouTube had tools that
would automatically seek out instances of copyright infringement, and the
company provided processes through which intellectual property owners could post
(40:45):
claims against material that they said infringed on their intellectual property.
So those processes could be anything from redirecting monetization so
in other words, someone else uploads a copy of a
movie that you made, you could, as the owner of
that intellectual property, choose to turn monetization off so they
can't make any money off of it, or even redirect
(41:07):
that monetization so any money they would have made goes
to you, or you could actually demanded that video be
removed and would be taken down off of YouTube. That
tool by the way, has been the center of much
debate and controversy, as over zealous content owners have abused
it in the past, sometimes even using it to take
down their own videos that they put up in an
(41:29):
effort to protect their intellectual property. I'll chat about that
more in the next episode. I'm sure now, even though
we don't really know what happened with that, I think
we could say that at least YouTube from outward appearances
could claim that they were in all good faith pursuing
the processes necessary to protect other people's intellectual property. Whether
(41:52):
they were really doing that to their fullest extent, that's
still a matter of debate. H I like to take
people at their word. But the same time, I figure
if I ran a company that was worth billions of dollars,
I might claim that I was doing everything I could
to be on the up and up and not worry
so much about whether that was true. But I'm not
in that position. If someone would like to put me
(42:14):
in that position and test my moral fiber, I welcome it.
Send your billion dollars to how stuff works care of
Jonathan Strickland, And I cannot stress how important that last
bid is, because if Josh gets his grubby hands on it,
I'll never see it. All right, I'm gonna end this
episode with a quick rundown of another feature that really
(42:34):
transformed YouTube and opened up a world of opportunities for
a select few individuals, particularly in the early days, and
that is the YouTube Partner Program. This was YouTube strategy
that made it possible for the average person to launch
a channel and to monetize it. Now. Previously that was
something only the brand channels could do big big media companies,
(42:55):
But now it is possible for a person to become
an Internet celebrity and act really make money off of it. Now.
I've often mentioned to my friends who claim I'm Internet
famous that that kind of fame is largely useless. First
of all, I'm not really famous. Second, what little fame
I do have, I can't leverage in any remotely useful way.
(43:17):
I can't even get a good table at a restaurant
with it. But YouTube's partner program gave a few folks
the shot at making a living by creating online videos,
and before long a small number of YouTubers began to
earn decent some amounts of money, sometimes more than decent,
like up to six figures a year making videos. We
(43:39):
also started seeing more viral videos coming from people who
could create a compelling share double video. There tons of
examples of viral videos and YouTube's history, and we often
saw some of those same people attempt, often unsuccessfully, to
repeat that experience by creating more videos similar ones to
the ones that got a big hit. And it became
(44:01):
clear that hitting a home run with a viral video
once it was not a guarantee that you'd ever end
up with a sustainable business. Though if your video was
popular enough, you could still make some decent cash off
of a single shot. It might just take a while
and be spread out over several years. And that brings
us up to early two thousand seven. Obviously, we've got
(44:23):
a lot more to talk about in the history of
YouTube to bring us up to date, so in our
next episode, we'll look at how YouTube has expanded in
the last decade, as well as some of the controversies
surrounding the company. Will explore the bizarre world of the
YouTube kids app, which has had some truly David lynche
In scale weirdness going on with it, and we'll also
(44:44):
take a closer look at some of the battles between
content creators and the various intellectual property claims that have
happened over the past several years. Meanwhile, if you guys
have suggestions for other topics I should cover here on
tech Stuff, you should let me know about them. One
way you can do that is sending me an email.
The addresses tech Stuff at how stuff Works dot com,
or you can drop me a line on Facebook or Twitter.
(45:06):
The handle for the show at both of those is
text Stuff HSW Remember on Wednesdays and Fridays, I record
this show and I stream it live. If you want
to see the show early and find out what's cool
in tech, sometimes more than a week before everyone else does,
just go to twitch dot tv slash tech Stuff. The
schedules up there and you can join the chat room
(45:28):
and chat with me and and watch as I make
gooflem ups in between takes it happens. I hope you
enjoyed this episode. I look forward to talking to you
with more about YouTube and kind of exploring how that
site has evolved ever since Google took possession of it,
and uh, I look forward to hearing from you guys,
(45:49):
finding out what you want me to talk about in
the future. Remember, it can be any sort of topic.
It can be a technology, could be a company, could
be a personality in tech. Maybe there's someone you want
me to interview on the show, or me to be there,
someone you want as a guest host for an episode.
Give me a shout and let me know and I
will talk to you again. Release soon for more on
(46:14):
this and thousands of other topics. Is it how staff
works dot com
TechStuff News
Hosts And Creators
Oz Woloshyn
Karah Preiss
Popular Podcasts
Bookmarked by Reese's Book Club
Welcome to Bookmarked by Reese’s Book Club — the podcast where great stories, bold women, and irresistible conversations collide! Hosted by award-winning journalist Danielle Robay, each week new episodes balance thoughtful literary insight with the fervor of buzzy book trends, pop culture and more. Bookmarked brings together celebrities, tastemakers, influencers and authors from Reese's Book Club and beyond to share stories that transcend the page. Pull up a chair. You’re not just listening — you’re part of the conversation.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!